Building on the Broadband Investment Bump

Some rare good news as we emerge from an intense and exhausting political season: In 2017, investment in broadband rose by $1.5 billion to $76.3 billion. This reversed a decline of approximately $3.2 billion in 2015-16.

What made the difference? Regulation. Specifically, the Federal Communications Commission (FCC) repealed the rules it unwisely imposed in 2015 that treated broadband as a monopoly and restored the rules that had been in place for nearly 20 years beforehand, under which the Internet first grew and flourished thanks to billions of dollars in investment and a bipartisan consensus.

This seems like common sense, but for the past several years, the political and tech communities have been mired in a bitter debate over “net neutrality” that obscures the real facts. Broadband is not a monopoly, and policies from the 1930s are inappropriate for the rapidly converging technologies and platforms of today.

The basic point is simple: Higher investment in broadband correlates both with the certainty of light-touch regulation and — this is the really important part — with the growth of the Internet itself. By starting the process of getting the rules right (and taking a lot of flak in the process), the FCC was able to help attract increased private sector investment to broadband.

In short, what the proponents of the FCC’s new/old rules on broadband said would happen has started to happen.

Some, though, might object that this is basically just a drop in the bucket or a rounding error. That argument is seriously misplaced.

First, it’s still a lot of money. “A billion here, a billion there,” as Sen. Everett Dirksen once said, “and pretty soon you’re talking about a lot of money.” The $76.3 billion is a lot of money for one year for one industry, but it’s only a part of about $1.5 trillion that network operators have invested in broadband over the past two decades. So look at the $1.5 billion figure as a down payment on future, greater investments. (And by definition, if $1.5 billion is basically a rounding error, that concedes that only private sector investment gets the broadband deployments the country needs.)

Second, these figures are for all of 2017. During the entire year, the old rules were still in place (they didn’t fully take effect until June 11, 2018). Given the intense debate over this issue last year, some investors were understandably cautious. The stock market also grew robustly last year, so there was competition for investment dollars. That broadband increased at all is a good sign.

Third, even with the new rules (that returned markets to the old rules), significant regulatory underbrush still exists. But the FCC is addressing this, with recent reforms on pole attachment rules and other charges for deployment of broadband. This matters because it’s far better to have investment in broadband actually going to broadband rather than to unnecessary fees and regulatory costs.

Finally, one might also expect a relative slowdown of increase in short-term investment given imminent massive investments in next-generation networks — the hundreds of billions of dollars that will be necessary to deploy 5G broadband that will have exponentially faster speeds and power the Internet of Things. With the first 5G launches coming this year, it’s even more critical to get the policies right that will enable fast and widespread deployment of high-speed broadband.

That’s more likely to the degree that policymakers understand how broadband benefits the economy and, more specifically, that politicians understand how broadband is boosting local economies and bettering their constituents’ lives. No one wants to be the member of Congress who watches as a neighboring district wins a new business in part because of better broadband elsewhere.

Thus, it’s important to get policies in place that will encourage broadband deployment everywhere as fast as possible — and this will be even more vital with 5G. Connected cars, after all, only work if they’re always connected.

With an election recently held and these new data showing how even the promise of restoring light-touch regulation raises investment in broadband, it’s time to move past a tired, binary debate over “net neutrality” and recognize that only very high levels of private sector investment, combined with rules that encourage this investment across multiple platforms, will move us forward into the broadband future.

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